Determinants of cost overrun: the case of condominium housing projects in bole sub-city.

Abstract

Cost overrun in building construction projects is a ubiquitous problem which affects project completion and general performance with regards to quality, time and cost and known to result to project failures, increased time spent, and loss of productivity and revenue which in turn affects the economy of the nation. Several determinant factors are responsible for the undesirable increased cost of a condominium housing project. The aim of this study is to highlight the determinant factors of condominium housing projects cost overrun; the case of 20/80 condominium housing projects in Bole sub-city, Addis Ababa. Based on a comprehensive literature review, forty factors which were believed to cause condominium housing projects cost overrun were shortlisted and were categorized into four major groups namely, contractor related, consultant related, client related and external/other factors. The survey was done in order to have the stakeholder’s opinion on identifying and ranking the most common factors causing project cost overruns and their effects on housing projects in the sub-city. In conducting the study, both exploratory and descriptive research design with quantitative and qualitative research approaches were adopted. A total of 77 questionnaires were distributed to contractors, consultants and clients which are considered as the target population of the study and 72 were collected for analysis and interviews were made with most concerned stakeholders. The selection of respondents was made by using purposive sampling technique. Some mitigation strategies were proposed. The data obtained was analyzed statistically. Both descriptive and inferential statistics were used to see the determinants of cost overrun. Relative importance index and mean score methods were used to find out the most significant factors affecting cost overrun. The overall results of the finding show that the most significant factor of cost overrun based on RII was market inflation with a RII value of 0.781. Similarly, regression model indicates from the overall factors of cost overrun, external/ other factors affect cost overrun of condominium housing projects significantly. Finally, the necessary conclusions and recommendations were made